Contractors will have to report any labor law violations to federal agencies under an executive order signed by President Obama July 31, 2014.

Contractors will need to disclose any labor law violations from the past three years before a contract can be awarded to them. Violations include family and medical leave, collective bargaining and wages.

The order would also charge agencies with taking contractor labor law violations into account when awarding contracts.

Only contracts valued at more than $500,000 would be affected and the order will be implemented in 2016.

The Labor Department was wrong to declare a privately financed development project a “public work” that would be subject to higher wages under the Davis-Bacon Act, a federal court ruled Monday in a lawsuit brought against the labor agency by the District of Columbia.

In the ruling, the U.S. District Court for the District of Columbia said the “CityCenterDC” development won’t be built or used by the government or the public. While the mixed-use project of condominiums, apartments, offices, hotel, retail stores and some public open spaces will sit on a parcel of land owned by the District of Columbia, it will be entirely privately funded, occupied, and maintained for the duration of the developers’ 99-year leases with the city, Judge Amy Berman Jackson said in her decision.

That contradicts the decision that was made by the Labor Department’s Administrative Review Board, which had determined the project was a “public work” for purposes of the Davis-Bacon Act. That law — enacted during the Great Depression to stop contractors from driving down wages with cheap labor — requires the payment of local prevailing wages to workers on federal construction projects. The Labor Department determines the wages.

Legal experts who’d watched the case had said the Labor Department’s decision could have a significant effect on construction projects if it were to stand.

A new congressional report criticizes the federal government for awarding tens of billions of dollars in contracts to companies even though they were found to have violated safety and wage laws and paid millions in penalties. Issued on behalf of the Democratic senators on the Health, Education, Labor and Pension Committee, the report cited examples over the past six years.

For instance, Imperial Sugar had $94.8 million in federal contracts last year, even though it paid $6 million in safety penalties over a 2008 factory explosion in Georgia that killed 14 workers. The report also noted that the federal government had awarded $4.2 billion in contracts to Tyson Foods since 2000, even though Tyson has faced more than $500,000 in safety penalties since 2007 and 11 of its workers have died on the job since 1999.

The report urges the government to weigh a company’s safety and wage violations more closely as it awards contracts, which are about $500 billion a year to companies employing 26 million workers, representing 22 percent of the nation’s work force. It stops short of recommending automatic suspension of contracts or debarring contractors that were found to have violated federal laws, partly because government agencies were sometimes at fault, a committee staff member said.

“Taxpayer dollars are routinely being paid to companies that are putting the livelihoods and the lives of workers at risk,” the report said. “Many of the most flagrant violators of federal workplace safety and wage laws are also recipients of large federal contracts.”

A Reston, Va.-based government contractor sent employees notices of potential layoffs due to across-the-board budget cuts from sequestration,The Washington Post reported.

Serco Inc. sent out Worker Adjustment and Retraining Notification Act notices to 770 employees in Maryland and Virginia. Candy Curtin, the company’s senior vice president for human resources, told the Post Serco was “advised by an attorney” that the notices would be the “best course of action.”

A spokesman for Serco told Government Executive that the “notices were sent out only as a possibility of what may happen due to sequestration,” and that so far “nothing has happened “ to Washington, D.C., area contracts that would necessitate layoffs.

In its latest guidance, the White House has set the parameters under which it will let contractors bill the government for the cost of layoffs and contract changes caused by sequestration, if it occurs.

The Sept. 28 memo also reiterates the Labor Department’s position that potential for sequestration does not trigger the Worker Adjustment and Retraining Notification Act, known as the WARN Act, that requires companies to give 60 days of notice before a layoff.

The White House said that contractors can bill the government for costs under two circumstances.

1. If sequestration occurs, and it causes a company to lay off workers or close a plant.

2. The contractor has followed Labor Department guidance on sequestration, and has competition costs for WARN Act liability as “determined by a court as well as attorney fees and other litigation costs.”

Nondefense agencies would be hit with $39 billion in top-line budget cuts if the current law’s threat of sequestration kicks in on Jan. 2, 2013, according to new calculations by the Professional Services Council, a contractors trade group.

Though Congress and the White House could still reach a budget deal and head off the 2011 Budget Control Act’s requirement of across-the-board reductions, industry groups have been sounding the alarm about the short- and long-term harm the indiscriminate cuts would impose — particularly in defense.

In a pivot to the civilian agency side, the council recently analyzed sequestration’s likely impact on 16 nondefense agencies for fiscal 2013. It assumed that Congress will pass a six-month continuing resolution, as expected, and that fiscal 2012 enacted levels form the basis for applying the cuts.

In recent months there has been no shortage of comparisons between the budget reductions of the 1980s and 1990s and the likely impacts of the current draw-down. While some of the comparisons are instructive, there also are important lessons that can be drawn from the previous declines that could be tools to drive new thinking and help avoid the mistakes of the past. Unfortunately, in some very key areas there is little evidence that those lessons are being widely heeded.

Specifically, during the last significant budget battle in the 1990s, the Defense Department, in the aftermath of the Cold War, reduced its total physical and personnel infrastructure by about one-third. In fact, according to the Government Accountability Office, 98 percent of all federal workforce reductions during the 1990s took place at DOD. Further, those reductions were taken on an almost linear basis—almost all functional areas were affected at a similar rate, including acquisition.

At the time, one key part of my portfolio at DOD was the acquisition workforce, which at DOD includes not just contracting but also program management, systems engineering, and a range of other high-end skills. We fought long and hard to prevent the Congress from imposing massive, arbitrary, across-the-board acquisition workforce reductions. Yet, even as we fought against immediate cataclysmic cuts, we nonetheless drove sizable reductions in that workforce on our own.

In so doing, we failed to fully account for the already evident and growing demographic imbalance in the workforce and for the fact that, despite the budget reductions, the department’s acquisition and technical needs were growing due to the technology revolution and DOD’s evolving mission requirements. As a result, more than a decade later, DOD finds itself facing greater workforce challenges than should be the case, as evidenced by the corrective action plan in former Defense Secretary Robert Gates’ 2009 workforce initiative. And within the civilian agencies, where attention to the acquisition (and broad technology) workforce is a more recent phenomenon, the problems are equally, if not more, acute.

Therein lies a critical lesson that we can learn from, but don’t appear ready to do so. The president’s budget request includes significant increases in positions and funding for the Defense Contract Audit Agency, Defense Contract Management Agency, and the Wage and Hour Division of the Labor Department (which enforces the Service Contract and Davis Bacon acts, among other things).

While these increases may well be needed, it is notable that these are all post-award, oversight organizations. Beyond significant but still limited funding to continue the defense acquisition workforce development fund, the budget has little in the way of meaningful proposals to increase other, critical operational and business skills in civilian agency acquisition and the broader technology fields so essential to the government’s ability to innovate and drive higher performance.

Although we haven’t yet seen the Republican budget proposal, it is unlikely that it will place more emphasis on developing critical skills in the federal workforce and may well go in the other direction.

But, even more importantly, there are no serious proposals on the table today to address the challenges current federal personnel rules and policies create for the government when it is competing for talent. It remains incredibly difficult within government to selectively hire, train, compensate, develop and manage personnel with especially necessary skills. Such strategies are commonplace in the private sector and play a key role in the ability of firms to compete for critical talent. The importance of these strategies – as well as the mandate for new thinking – only compounds during times of constrained resources.

One might ask why an industry executive is raising this issue. The answer is simple: As is true in any other market, the ability of government contractors to do what they do best – optimize efficiency and drive innovation – is tied in large part to the nature and quality of their partners on the other side of the table. The objective is not to supplant contractors; rather it is in the best interest of both government and industry to have a well-resourced, well-supported and well- trained partner workforce. In the end, we rise and fall together.

The Office of Personnel Management reported last year that the government retirement rate rose by nearly 30 percent in 2011 over 2010. Other OPM data continues to show that the government has about four times as many employees over 50 as it does under 30, and that the percentage of federal employees who are deemed to be “technical” has not grown in more than a decade, even as those percentages in the private sector have skyrocketed.

In short, there is a huge federal workforce problem staring us in the face that demands prompt, comprehensive and sustainable action. The lessons of history clearly illustrate what will happen if we don’t learn from them.

In a win for federal contractors and contracting officers alike, Agriculture Department officials decided on Jan. 30 to withdraw a new final rule requiring companies to keep their subcontractors and suppliers in line with federal labor laws, a department spokesman told Washington Technology on Jan. 31.

Under USDA’s rule, companies contracting with the department would have to certify that they comply with labor laws and that their subcontractors of any tier and their suppliers also comply. It would have included reporting requirements for violations and the threat of tough action by the department if there were violations.

Officials took a unique approach to rule-making and added it as a direct final rule to the Agriculture Acquisition Regulation on Dec. 1. It was set to take effect Feb. 29. However, they said if the rule garnered any adverse comments, they would withdraw the rule in part or in whole.

The Council of Defense and Space Industry Associations, a group of six industry groups, objected to the rule in a letter to the USDA last week. The council said the rule overlapped more than 180 federal labor laws and regulations to implement the laws. The rule would also add additional work to both the prime contractors, which would have to monitor their subcontractors and suppliers, and the contracting officers who would review reports on compliance. Further, USDA could possibly bump heads with the Labor Department in the case of a labor law violation.

The council’s letter pushed USDA to withdraw the whole rule.

“Yesterday, USDA withdrew the Dec. 1, 2011, direct final rule adding a new clause to the Agriculture Acquisition Regulation,” the USDA spokesman said.

Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a member of the overarching-industry group objecting the rule, said the USDA did well to withdraw its rule after receiving the letter from the council about the rule’s ambiguities and overlap with other standing laws.

“I’m pleased USDA acted promptly in light of well-reasoned comments from the council,” he said.

Six industry groups are objecting to a new Agriculture Department rule on labor law violations, claiming the rule is redundant and would cause extra work for businesses and contracting officers. The groups made their complaint known in a Jan. 26 letter to department officials.

Under USDA’s rule, companies contracting with the department must certify that they comply with labor laws and that their subcontractors of any tier and their suppliers also comply. It includes reporting requirements for violations and the threat of tough action if there are violations.

The rule was issued Dec. 1 as a direct final rule, amending the Agriculture Acquisition Regulation (AGAR). It takes effect on Feb. 29. In their notice, department officials said they would pull back their final rule, if they received “adverse comments” on it.

In the letter, six business groups, called the Council of Defense and Space Industry Associations, said the government already has 180 federal labor laws, as well as regulations to implement those laws. The government also has numerous offices within the Labor Department, such as the Office of Federal Contract Compliance Programs, to ensure companies abide by the complex web of laws. The council said the USDA officials would have to be careful that they not usurp other agencies’ authorities, which could lead to conflicting rulings on enforcement.

The rule would add a significant burden on companies with large numbers of employees and facilities, and with significant numbers of subcontractors and suppliers. They would have to develop procedures to monitor and report on their own compliance with each of the labor laws. Then, companies would have to set up similar procedures to monitor compliance up and down their supply chain.

Contracting officers also would have a lot of extra work as a result of the law. Acquisition officials would be responsible for reviewing reports of noncompliance and taking action against companies. Meanwhile, officials may not have the expertise and resources to interpret and then enforce the myriad labor laws.

The council noted several ambiguities in the rule, such as which labor laws apply to the rule. Another concern was with the compliance clause. When awarded a contract, the prime contractor deems that all its subcontractors and suppliers are complying with labor laws. However, companies often will not have a contractual relationship with its subcontractors until after award.

“We urge USDA to immediately cancel the direct final rule and also withdraw the proposed rule,” the letter said.

The council is comprised of the Aerospace Industries Association, American Council of Engineering Companies, U.S. Chamber of Commerce, National Defense Industrial Association, Professional Services Council, and TechAmerica.

A small Labor Department office is giving companies another worry about tough oversight by seeking more power to investigate federal contractors about potential pay discrimination, primarily against veterans and disabled people.Labor’s Office of Federal Contract Compliance Programs (OFCCP) plans to do away with George W. Bush administration-era guidelines on checking companies’ equal pay because it says the guidelines are too restrictive or simply not used.

The Bush administration in 2006 set up a statistical approach to their reviews. Under those rules, discrimination must show a pattern or practice of disparate treatment and use a multiple regression analysis to identify compensation discrimination.

However, the Obama administration says those rules impose “overly narrow investigation procedures that go beyond what is required by law.” In addition, OFCCP officials say companies haven’t used guidance laid out by the previous administration on companies doing voluntary self-analyses of their compensation.

OFCCP officials now intend to get rid of the restrictive rules and use their own discretion to develop procedures to investigate contractors. Their plan is to continually refine the procedures to make them most effective.

“OFCCP will reinstitute the practice of exercising its discretion to develop compensation discrimination investigation procedures,” officials wrote in the notice.

The small office has already been checking out government contractors.

Rebecca Springer, counsel at the Crowell and Morning law firm, said eight of the last 10 companies’ audits that she worked on included checks by the OFCCP.

Despite the office’s increased efforts to expand its authority to act, contractors won’t have as much information on how OFCCP will go about reviewing compensation and wages to veterans and individuals with disabilities. By doing away with the detailed statistical analyses, she said officials will take a more simple approach to reviewing companies based on the resources available to the office.

“I think we are potentially headed back to an era of much greater secrecy as to how they are analyzing compensation,” Springer said during a webinar this month.

She also expects more regulations this spring and summer about OFCCP. There could possibly be new legislation to expand OFCCP’s authority in investigating companies.

Springer recommends companies should aggressively push back against the OFCCP if they have evidence of equal compensation and no discrimination against to certain people.